U.S. asset manager tied to ¥130 billion loss

SESC probes Las Vegas-based MRI over Japan's latest investing debacle

A U.S. asset management firm is suspected of mishandling the funds of thousands of Japanese clients in a debacle that could add up to losses of more than ¥130 billion, sources familiar with the matter said Friday.

The Securities and Exchange Surveillance Commission raided the Tokyo office of Nevada-based MRI International Inc. and other related locations in the afternoon for evidence for prosecutors.

Investigations by the commission so far show that most of the funds are missing and MRI International may have lost them, the sources said.

The Financial Services Agency, meanwhile, delisted MRI as a financial instruments firm, based on the financial instruments and exchange law.

Last year, AIJ Investment Advisors Co. was found to have lost most of some ¥145.8 billion in money invested by corporate pension funds. Its president has been indicted for fraud.

MRI International says on its website that it was entrusted to manage about ¥130 billion from some 8,700 clients as of the end of last December.

If the allegations on MRI are true, it will represent a scandal comparable to the AIJ case.

At the firm’s office in Chiyoda Ward, Tokyo, on Friday a notice had been posted on its entrance saying that the business was closed, and nobody answered the door Friday morning.

More than a dozen investors gathered at the entrance on Friday morning after hearing the initial reports.

One of them, a 70-year-old man from Chiba Prefecture, said he had invested about ¥50 million with MRI and that he was worried about the firm because the transfer of interest payments to his accounts was delayed twice last year.

“I didn’t think they were deceiving us from the beginning, but I wondered what the actual situation was,” he said with a sigh.

Another client, a 57-year-old man, said he had invested several hundred thousand yen since 2002.

“I had trusted them for 10 years. I want to at least get my capital (back) before I cancel my contract with them,” he said.

On its website, MRI says it was established in 1998 and handles a financial product called MARS, promising annual interest rates between 6 and 8.5 percent.

An official at MRI’s headquarters in Las Vegas declined to comment, saying the company does not have a person in charge of the matter at the moment.

Deputy Prime Minister Taro Aso, the finance and financial services minister, declined to comment on the affair, noting it is being handled by the SESC.